President Barack Obama’s budget would boost spending by the Food and Drug Administration while cutting funding for the Department of Health and Human Services for the first time in the agency’s 30-year history.

Obama’s budget good news for FDA

February 28th, 2011

WASHINGTON – President Barack Obama’s budget would boost spending by the Food and Drug Administration while cutting funding for the Department of Health and Human Services for the first time in the agency’s 30-year history.

The FDA would get a 33% increase, or about $1 billion in added funding in fiscal 2012. More than half of the increase, or $634 million, would be from fees paid by drug, tobacco, food and medical device companies.

The funding includes $124 million to develop a pathway for biosimilars, generic versions of biotechnology drugs. In the same vein, the budget calls for cutting the length of time that drug makers can exclusively market branded biologic drugs, from 12 to seven years.

Obama also sought to end controversial “pay-for-delay” deals that let branded and generic drug companies settle patent challenges with payoffs that delay lower-cost rivals from getting to market.

The spending plan would give the Federal Trade Commission the power to block such deals.

The proposal for a biosimilar pathway is a more dramatic version of a similar provision included in the health care overhaul law. That statute gave brand name pharmaceutical companies a dozen years of exclusive sales for biologics. Generic companies had fought for a shorter period, and administration officials said in budget documents the seven-year proposal “strikes a balance between promoting affordable access to medication while at the same time encouraging innovation to develop needed therapies.”

The action would generate savings of $80 million starting in 2015 and could save $2.3 billion from 2012 to 2021, the White House estimated. Eliminating pay-for-delay deals would save another $540 million starting in fiscal 2012 and nearly $8.8 billion through 2021, the administration added.

HHS, however, was targeted for a 2% cut, or $892 billion, even with its two largest programs, Medicare and Medicaid, growing more than 8% a year. The president said Medicare and Medicaid can realize savings via reduced spending on prescription drugs and fraud elimination.

The budget provides substantially more funding for research into cancer, infectious diseases and new drugs. But spending to help states and cities prepare for health crises like pandemic flu would be slashed.

The spending plan asks for $31.8 billion for the National Institutes of Health in 2012, up $745 million from what was provided in 2010. NIH director Dr. Francis Collins is expected by this fall to open a new drug discovery center for which the administration is requesting at least $100 million.

The administration also wants to increase the budget of the National Institute of Allergy and Infectious Diseases, which finances much of the country’s research on HIV and AIDS, by $100 million, to $4.9 billion.

Funding for the National Cancer Institute would be increased by $95 million, to $5.2 billion.

The FDA would also get $49 million to improve the regulatory pathway and review-and-approval process for products relying on new and emerging technologies.

Another $70 million would help fund the development of medical countermeasures for national security threats and naturally emerging diseases.